Kozminski Techblog

Netflix is one of the oldest streaming platform on the market. It attracted its customers with unlimited content whenever and wherever without the adds like regular television have. High quality content and wide range of titles available made company unbeatably the most known for a very long time. Corporation announced that by November they will add fourth, cheaper subscription option containing advertisements. Lack of those was the reason why people signed up in the first place. How does the future looks like for Netflix?

Even though Disney+ made its entrance to the market in 2019 other streaming platforms maintained their clients as thousands of people started their journey with broadcasting services during lockdown. Now when everything is coming back to normal they don’t have time to sit on a couch and watch movies all day, so they cancel many subscriptions and hold on to only few, the most entertaining ones. Statistic shows that Netflix is not one of them as they’re loosing more and more customers. It reached its peak in 2021 but in this year number of clients decreases. Why?

Mostly because Netflix’s content is simply no longer good. For past few years platform is mostly based on its original content, which, in many cases is very predictable and similar to each other. Even if something is more interesting it does not get renewed after one or two seasons. They don’t provide as much new movies, and the ones that already were on platform disappear in order to appear on other broadcasting services. Not to mention the fact, that Netflix is the most expensive streaming platform among its competition. The same old titles, disappointing new ones and high price makes obvious choice of which subscription to cancel.

Yet company does not give up. Reed Hastings revealed, that new created payment plan will cost only $6.99 but it will contain around five minutes of adds per one hour of watching. In that case scenario Netflix will come close to regular TV program. That solution will not attract a lot of new customers. More likely people that already pay monthly subscription will just change plan for cheaper. Part of them might’ve wanted to cancel payment completely, but some might have not even planned this as just an opportunity to save money appeared. However it is expected for Netflix to earn about $3 billion in 2026 just for advertising. That does not look like drop of incomes at all.

Even though forecasting for Netflix looks bright many people are bored of its content. So if in the future company will base on money from adds and not the customers public opinion of the platform might get lower and lower. It will lead to more people cancelling subscriptions. Unless Are we going to witness yet another great company’s fall? Because who will pay for advertising their product, if nobody will watch it.

sources:
https://www.ft.com/content/71994db7-6a37-4a3d-b6a8-b68a151bc81a
https://www.youtube.com/watch?v=OiEJhVcx0H0
https://www.statista.com/statistics/250934/quarterly-number-of-netflix-streaming-subscribers-worldwide/

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Although Netflix has been heard of as streaming video portal a few years ago, the company has been existing for over 20 years, the origins are dated at 1997. At the beginning it was a traditional cassette tape rental, and later on a DVD rental with a mailing option, which was quite new at that time. You could order your favorite movies online, and Netflix sent them to you by traditional mail. After watching the movies, clients sent back the DVDs by post , and Netflix charged for it several bucks. 2007 was a breakthrough for the company. First of all, the company boasted that it has already delivered more than one billion CDs by mail order, and in the same year they introduced the first content in the form of video streaming.

Netflix has been breaking records for several years, such as, for example, the stock market valuation, the amount of investment in new content or the number of subscribers. It is estimated that Netflix subscribers amount to 120 million people around the world. Taking into account that most accounts are used by several people, the number of Netflix recipients is slowly approaching half a billion. The company is already valued at over $ 120 billion and is year by year an increasingly serious threat to traditional cable networks. These are aware of the competition in the form of a large monopoly of on-demand content provider and they themselves introduce similar solutions to the offer. It seems to me that the days of traditional cable TV are already counted and their agony will not be long.

At the beginning of 2018, Netflix announced that this year it intends to invest about $ 8 billion in new content in just one year! In 2017, Netflix spent $ 6 billion on this purpose. These are very large numbers, and this means that every year its portfolio will be richer. A smart strategy for the series’ premieres causes that every month there are some new good shows introduced and it is difficult to resign from subscription.

Analysts predict that Netflix will at least double its value in the next 10 years. Interestingly, it is generating financial losses all the time, but the company is backed by investors who donated billions of dollars in several financing rounds. Analysts say Netflix will have a $ 3 billion loss this year, but in 2021 it will be $ 4 billion profit. So far, Netflix does not offer its services in China, and it is a market with huge potential that will certainly be exploited in the future.

Sources:

https://pl.wikipedia.org/wiki/Netflix

https://www.nytimes.com/2017/10/16/business/media/netflix-earnings.html

https://www.forbes.pl/biznes/netflix-liczba-subskrybentow-prognozy-do-2028-roku/6n6qml2

https://finance.yahoo.com/quote/NFLX/